In 2010, I started Smarteys, a financial technology business, in order to provide a web solution to help college grads plan for their financial futures. The Smarteys mission—to revolutionize how young professionals manage their money—also evoked a desire to make the world a better place. While we eventually decided to close the company in 2014, my business could be classified today as a for-profit social enterprise. I faced several challenges, but one of the main ones was securing enough growth capital for a for-profit company with a large social purpose.
I am not alone. Many businesses, especially for-profit social enterprises, struggle to find capital for growth.
Over the last few years, however, dedicated resources have sprung up to fill the market's previous capital and resource void around for-profit social enterprises. Keep in mind that other players in the space might put an “impact investing" label on for-profit social enterprises. While the term means different things to different individuals, it is worth understanding the broad industry terminology.
What Is Impact Investing?
Impact Investing Organizations to Consider
Kapor Capital, a venture capital firm based in Oakland, California, has been a pioneer in the impact investing space. I began to research this company at the tail end of my entrepreneurial journey, but have since known several businesses who have received funding from them. A key tenet of Kapor's philosophy is that “the lived experience of founding teams from under-represented backgrounds provide a competitive edge." Kapor views “impact" first through the lens of race and gender, but also holds a view that diverse founding teams can innovate to solve real-world problems and tangibly improve the lives of millions. Kapor 's current investment philosophy is unique, and if your business fits the criteria, could represent a viable resource for your organization.
There has also been recent buzz around a collaboration to drive more money into for-profit and nonprofit social enterprises in Chicago. In the summer of 2016, the Chicago Community Trust, the Calvert Foundation and the MacArthur Foundation announced their goal to invest $100 million in impact capital into Chicago's social enterprise community. Also aimed at both for-profit and nonprofit organizations, Benefit Chicago is focusing its investments exclusively in the Chicago community. The place-based approach is innovative for the space, and represents an exciting opportunity if you are doing business in Chicago. While the excitement is high now, time will be the ultimate test of how successful Benefit Chicago companies will be.
While the aforementioned resources represent only a few of the capital and business service support to social enterprises, they are indicative of the new wave of impact investing across the nation. Impact investing represents different things to different investors, which can also help you to seize on its potential relevance for your business. I wish that there had been more social enterprise focused resources during my entrepreneurial tenure. That said, you may now have the opportunity to find capital and resources in order to grow and expand your business.
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